Three Problems Causing Higher Health Costs

Add Dr. Marty Makary’s name to the expansive list of health care experts who are fed up with the system, don’t think we can afford to wait for Congress to enact reforms, and have useful ideas about how people can become healthier and perhaps save a bundle of money in the process.

A surgeon at Johns Hopkins in Baltimore and a widely published writer on health issues, Makary explained his take last fall on how to fix health care in his book, “The Price We Pay: What Broke American Health Care – and How to Fix It.”

His account began with an extended and emotional lament that many of his colleagues have abandoned the Hippocratic Oath in favor of charging inflated prices for surgeries and health procedures that are not in their patients’ best interests — or may not even be needed at all.

“Patients are willing to let me put a knife to their skin within minutes of meeting me, or to divulge secrets they’ve kept for a lifetime – just because I’m a doctor,” he writes. “For centuries, medicine was based on an intimate relationship between doctors and patients. But behind the scenes, a gigantic industry emerged: buying, selling, and trading our medical services. Health care industry stakeholders are playing a game, marking up the price of medical care, then secretly discounting it, depending on who’s paying.”

Makary’s research uncovered no shortage of bad actors in health care, including the Carlsbad Medical Center in New Mexico, which has sued thousands of people for unpaid medical bills in the last several years.

The company’s owner, Community Health Systems, has been repeatedly fined for overcharging patients. In a New York Times story about Makary’s research, a Carlsbad spokesperson defended its collection practices but declined interview requests. The hospital later said it would stop suing certain low-income patients and discount prices to uninsured patients.

While such horror stories make for interesting reading, Makary treats them as a perhaps-necessary prop to interest readers in paying attention to the solutions he and others propose. His goal in writing the book, he said in a phone interview, “has been to create health care literacy by taking a complex topic and making it relatable and understandable.” He does that by telling stories that highlight the tools people and businesses can use “to get a better deal on their health care.”

The book reflects Makary’s largely positive views about the future of health care as he lays out ways to deal with the system’s current shortcomings.

The three main health problems he addresses are health care pricing failures, middlemen who make huge profits on health care while adding little to patient well-being, and the enormous amount of inappropriate care that people receive. For each problem area, he tracked down people and companies doing innovative work to help lower costs and help people gain access to higher-quality care.

In one example, a former pharmacist used medication lists to find out how much money pharmacy benefit managers were pocketing for their services as an intermediary between employers and pharmacies. Once employers knew the difference, they were able to renegotiate their pharmacy benefit manage contracts and save “millions of dollars.”

“People blame doctors, hospitals, payers, pharma, device companies, and even patients for not taking better care,” he writes. “But the money games are so established and the revenue stream they produce is so steady that experts don’t want to discuss altering the business model. But every one of us in health care, every stakeholder, needs to look inward and address the waste in our own backyard.”

In other words, “there’s no diabolical villain,” he said on the phone. “We have, structurally, a broken system.”

Makary said the drivers of health care costs are hospitals, insurance companies, drug companies and other middlemen, such as pharmacy benefit managers.
“There are so many hands taking money out of the system that there’s no silver bullet solution to save money. To lower costs, we must take on the powerful stakeholders,” Makary writes.

Disclosing the actual costs of health care is a powerful start. This includes the often inscrutable prices charged by hospitals and other care providers but also should include the final prices – often negotiated sharply downward — that insurers and providers agree upon. Health care consumers usually only know their own out-of-pocket costs but these mask the inflated costs that insurers have paid for their care.

Makary’s advice: Ask for a price for every medical service you are considering. Doing so can help identify providers who take advantage of consumers by prescribing unnecessary tests and procedures that carry inflated price tags. “Price transparency alone will not solve all the problems of predatory screening and unnecessary medical care, but it could save the health care system hundreds of billions of dollars, Makary writes.

“Health care is perhaps today’s most divisive, territorial political issue,” the book concludes. “But many of the needed solutions are not partisan; they’re American. We are at a pivotal juncture. Spending on health care threatens every aspect of American society. The time for commonsense reform has arrived.”

Despite all the problems he encountered doing research for the book, Makary said, he wound up being optimistic that “good stuff is happening” and that “the innovators can help us dig out of our cost crisis.”